The Class Action Fairness Act (“CAFA”) includes a “local controversy” exception, requiring federal district courts to decline jurisdiction over classes where, amongst other things, more than “two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed.”  28 U.S.C. § 1332(d)(4)(A)(i)(I).  In Simring v. Greensky, LLC, — F.4th —, 2022 WL 894206 (11th Cir. Mar. 28, 2022), the Eleventh Circuit addressed, where plaintiffs have not submitted actual evidence on the residency of putative class members, whether courts are confined to the class definition in a class action complaint to determine if this exception’s two-thirds citizen requirement is met, or if courts can look at other statements in the complaint. The Eleventh Circuit answered that the review is limited to the class definition itself in the absence of independent evidence of class members’ citizenship.

Plaintiff Joan Simring brought a putative class action in Florida state court asserting violations of Florida law.  Although Plaintiff’s case was brought on behalf of “all Floridians similarly situated,” and there were other references in the complaint that implied the case was limited to “Floridians,” the actual class definition was drafted without regard to class members’ state of residence.  

Greensky removed the case to federal court, asserting that the district court had original jurisdiction under CAFA.  Plaintiff then sought to remand the case, arguing that Greensky had not proven that the amount in controversy exceeded $5m (as required by CAFA), and that the district court was required to decline the exercise of jurisdiction under CAFA’s “home state” and “local controversy” exceptions.  See U.S.C. § 1332(d)(2), (3), (4).  The district court granted the remand, relying solely on the “local controversy” exception and finding that all putative class members were citizens of Florida, even though the class definition was not so limited, based on statements “elsewhere in the Complaint.”  Id. at *2.

Greensky appealed. The Eleventh Circuit initially addressed Plaintiff’s argument that the district court lacked subject matter jurisdiction because there was less than five million dollars in controversy.  See Greensky, 2022 WL 894206, at *2–3.  The Eleventh Circuit easily found that the amount in controversy requirement was met, because one defendant submitted evidence that Plaintiff’s requested relief would exceed five million dollars when multiplied across the entire class.  Further, Plaintiff’s stipulation that she would accept no more than $4,999,999 in damages was irrelevant because, per the Supreme Court’s ruling in Standard Fire Insurance Company v. Knowles, 568 U.S. 588, 592–93 (2013), a named plaintiff for a putative class has no authority to bind other class members with such a stipulation.

Moving to the local controversy exception, the Eleventh Circuit reminded that class action plaintiffs can satisfy their burden of proving the local controversy exception’s two-thirds requirement in two ways: 1) by limiting the class definition to citizens of a certain state; or 2) by providing “‘evidence of the class members’ state of residence as well as evidence showing their intent to remain in that state.’” Greensky, 2022 WL 894206, at *4. The Eleventh Circuit saidthat its decision in Smith v. Marcus & Millichap, Inc., 991 F.3d 1145, 1156–57 (11th Cir. 2021), established that it is “only the class definition itself—not other portions of the complaint” that can restrict the scope of a class for purposes of the local controversy exception.[1]  Id.  And the class definition here was not limited to Florida residents.  Finally, because establishing the local controversy exception was Plaintiff’s burden, her failure to submit any evidence in support of her factual contention that the two-thirds requirement was met weighed heavily against her.  Accordingly, the Eleventh Circuit reversed the district court’s order remanding the case to state court.

Following Greensky, plaintiffs in putative class actions in the Eleventh Circuit who seek to use CAFA’s local controversy exception to escape federal court will either need to expressly limit their class to residents of a single state or put forth sufficient evidence to establish that the two-thirds requirement is met.  Defendants in these cases should look for creative ways to argue that the class definition is not so limited, as the Defendants successfully did in Greensky.

[1] Smith had not been decided when the parties in Greensky were briefing the remand motion.  See Greensky, 2022 WL 894206, at *4.